This blog was inspired by the following quote by Oystein Dahle, former Vice President, Exxon, Norway:
"Socialism collapsed because it did not allow prices to tell the economic truth. Capitalism may collapse because it does not allow prices to tell the ecological truth."

Monday, May 01, 2006

So what would such a plan look like?

Because there is lots of interest in gasoline right now, I'm going to start with petroleum, but this method can (and should) be applied address across the board, starting with coal and other fossil fuels and moving to mining, lumber, and grazing and eventually to overdevelopment, loss of biodiversity, and toxic emissions.

First, we calculate the cost to society of burning petroleum. We phase in a tax on the import or use of petroleum equal to this, and refund the proceeds to all legal residents (equally per capita).

Back in 1998, the "external" cost of gasoline was calculated at roughly $9 per gallon of gasoline:

http://www.icta.org/doc/Real%20Price%20of%20Gasoline.pdf

So this means implementing a tax of about $500/barrel, which I'd phase in at $10/barrel every month for 4 years. (Actually, some of this money would be recovered by reducing subsidies -- the net effect would be the same).

Assuming our use dropped from 15M barrels a day to 10M barrels a day, this would still raise $1.8 trillion dollars a year, or over $6,000 per person.

For a family of four, this means $24,000 to spend. They could use it to buy the same products you always have (not only will gasoline cost more, but utility bills will go up, the cost of plastic will go up, and even the cost of items such as food will go up, because they require petroleum to process and ship). Or, they could save money by driving less, installing insulation, buying local produce, and doing all of those conservation actions which they could never econommically justify (or even afford) before.

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This blog was inspired by the following quote by Oystein Dahle, former Vice President, Exxon, Norway:
"Socialism collapsed because it did not allow prices to tell the economic truth. Capitalism may collapse because it does not allow prices to tell the ecological truth."